Since the federal government announced earlier this year it would scrap the higher private health insurance rebate for people aged 65 and over, opponents have come out in force.

Private Healthcare Australia, the insurers’ peak body, says the government’s own modelling of about 44,000 older Australians dropping their cover due to the resulting higher premiums is a “significant underestimate”.

Three state health ministers have warned the change would push more people into their strained public hospitals.

So how many people would really drop their cover as a result of this policy change?

Our new research, designed specifically to test this question, gives some clues. In a nutshell, the sky won’t fall in.

What will happen? Who says what?

Right now, the private health insurance rebate depends on both income and age. Someone 65 or over gets a bigger government rebate on their premium than someone under 65 on the same income. This rebate increases further for those aged 70 and over.

From April 2027, the government proposes removing that age-based bonus. So the rebate would be equal for everyone on the same income, regardless of age.

The government argues this fixes a subsidy that’s inequitable and poorly targeted, so will improve intergenerational equity.

Its own modelling........

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